SBI cuts home loan rates, will others follow?

State Bank of India on Tuesday slashed home loan rate by up to 0.15 per cent on housing loan, a move likely to be followed by other lenders.

Home loans of up to Rs 75 lakh (Rs 7.5 million) would now be available to fresh borrowers at 10.10 per cent against the existing rate of 10.15 per cent, State Bank of India said in a statement.

The bank has removed the additional concession of 0.05 per cent given to women borrowers earlier and has brought in uniformity to all borrowers.

With regard to loans of above Rs 75 lakh, the new rate would be 10.15 per cent from the existing rate of 10.15 per cent, down by 0.15 per cent.

"It has now been decided to offer uniform interest rate on home loans with effect from August 26, irrespective of the loan amount," it said.

SBI home loans is available under two slabs -- under Rs 75 lakh and above Rs 75

lakh.

Previously, the interest rates on home loans were revised downwards on December 20, 2013 with a separate interest rate structure for woman borrowers at 10.10 per cent (on loans up to Rs 75 lakh) and 10.25 per cent (on loans above Rs 75 lakh) too, it said.

In the August review of monetary policy the RBI kept short-term lending rate unchanged at 8 per cent, while the cash reserve ratio remained at 4 per cent citing upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices.

Subsequently, the bank rate was retained at 9 per cent.

In order to infuse additional liquidity, RBI decreased SLR for banks by 0.50 per cent to 22 per cent with effect from the fortnight beginning August 9.

A similar move in June had released an additional Rs 40,000 crore (Rs 400 billion) into the system.